As Obamacare Kicks In, Microsoft Eyes Big Health Data

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If you need anymoreevidence that healthcare is going to be a monster new growth market for high-powered computing, take it from a guy like Craig Hodges.

As a general manager overseeing sales for Microsoft in the Northeast, you could say that Hodges sees some pretty big software contracts cross his desk. And right now, he says, there’s no other industry that looks ready to take a bigger bite of “big data.”

“Healthcare is an industry that is on the edge of exploding, from a data management perspective,” he said this week at a briefing in Microsoft’s Cambridge headquarters.

That’s a good thing for Microsoft (NASDAQ: MSFT) and everyone else who sells the systems for collecting, storing, and analyzing huge amounts of data. But it’s also potentially a boon for the U.S. economy as a whole.

As the recent blockbuster Time cover story illustrated in painful detail, the amount of money thrown around with abandon in American healthcare is often not governed by rhyme or reason. And that’s in an industry that could grow to consume a fifth of the economy, while failing to deliver results better than other countries with far less spending.

Those economics were a huge reason that President Barack Obama pushed for a signature healthcare reform law. And with the reform legislation now clear of serious political challenges, the federal push to more tightly regulate healthcare is beginning in earnest.

Here’s what that means for big-data tools providers like Microsoft: In Boston, the Beth Israel Deaconess Medical Center has used Microsoft services to help it track data about the flow of patients in and out of its facilities. That’s important because hospitals are under new pressure to cut the number of patients who are discharged from care and bounce right back in with a health problem, a phenomenon known as “readmission.”

“We have to reduce those,” Hodges says. “The better I can predict that, the healthier you’re going to be and the less cost I’m going to have to incur.”

And as the old journalistic saying goes—follow the money—the need for powerful data tracking flows through the healthcare system to insurance providers, too. Since it’s a financial industry, insurance is no stranger to serious number-crunching.

But Hodges points out that the healthcare reform’s mandate to cover nearly all Americans is changing the ways that those providers have to think about their business, too.

“They now have to have a consumer view of their world,” he says. “Before, if you were a Cigna or an Aetna, you sold to companies such as Microsoft. You sold to companies such as Fidelity.”

But now, Hodges says, individual plans and pools of consumers are becoming a new focus.

“So the ability to figure out who should be there target market, what’s the exact pinpoint offering that will get [a consumer] to subscribe to my benefit plan versus the variables for [another consumer],” he says.

Other areas of the economy will certainly grow their consumption of data analysis tools and services—finance, retail, marketing of all kinds. But there’s really no growth like that seen beginning right now in healthcare.

“I think we’re still kind of in the infancy stage,” Hodges says. “And people are trying to figure out what it means to them.”